Inventory Control & Warehousing Flashcards

Which inventory costing method assigns the most recent purchase costs to cost of goods sold during periods of rising prices?

Answer: LIFO

LIFO (Last In, First Out) uses the newest (highest) costs for COGS, resulting in lower reported profit during inflation.

A warehouse manager wants to reduce 'honeycombing' losses. What does honeycombing refer to?

Answer: Unused cubic space created when only some positions in a storage lane are occupied

Honeycombing is wasted storage space that occurs when partially empty lanes or slots cannot be filled by other products.

What is the primary function of a Warehouse Management System (WMS)?

Answer: Directing and tracking warehouse operations including receiving, putaway, picking, and shipping

A WMS orchestrates warehouse workflows, optimizes space use, and provides real-time visibility into inventory location and status.

Lead time demand is used in inventory management to calculate:

Answer: The reorder point

The reorder point equals average demand during lead time plus safety stock, ensuring replenishment arrives before stockout.

Which receiving process verifies that incoming quantities match the purchase order without referencing expected quantities in advance?

Answer: Blind receiving

Blind receiving requires workers to count and record actual quantities independently, preventing rubber-stamping of expected amounts.

What is the purpose of a 'put-away' process in warehouse operations?

Answer: Moving received goods to their designated storage locations

Put-away moves inbound products from the receiving area to assigned storage locations per the WMS or slotting plan.

Which inventory metric indicates how many times inventory is sold and replaced over a given period?

Answer: Inventory turnover ratio

Inventory turnover (Cost of Goods Sold ÷ Average Inventory) measures how efficiently inventory is being converted into sales.